ACV - Large bad debt provision dents earnings once more - Earnings Flash
  • 2024-01-31T00:00:00
  • Company Research
  • ACV announced Q4 2023 results with revenue and PBT adjusted for FX gains/losses increasing 24% and 5% YoY, respectively. 
  • In 2023, these two metrics surged 39% and 97% YoY, achieving 99% and 89% of our respective forecasts.
  • Q4 2023 revenue jumped YoY as international passengers nearly doubled YoY, which is partly offset by a 15% YoY drop in the domestic passenger number amid weak consumer sentiment.
  • EBITDA margin trailed our expectation, edging down from a low 38% in Q4 2022 to 37% in Q4 2023 due to bad debt provisions. 
  • Net bad debt grew from VND3tn (end-2022) to VND3.9tn (end-Q3 2023) but slumped to VND2.9tn (end-2023) as ACV recognized VND1.1tn of bad debt provision in Q4 2023. 
  • We see a slight downside risk to our forecast due to weaker-than-expected domestic tourism, pending a fuller review. Regarding bad debt, we have already factored in our forecast VND5.4tn of provision expenses for the 2023-2025 period and assume ACV will reclaim most of this amount in 2026—2028.
  • The Ministry of Finance’s latest Draft to amend Decree 140/2020, if approved, would exempt ACV from paying all its profits as cash dividends, which many State-owned companies are required to do. This was suggested in order to allow ACV to be more flexible in funding the Long Thanh International Airport project.

ACV’s  2023 results

VND bn

Q3 2023

Q4 2022

Q4 2023

Q4 2023 YoY

2022

2023

YoY

2023/ 2023F

2023F

Net revenue

5,328

4,080

5,047

24%

14,453

20,032

39%

99%

20,180

Aeronautical revenue

3,737

2,847

3,429

20%

9,903

13,896

40%

98%

14,149

Take-off and landing fees

682

585

639

9%

2,167

2,571

19%

99%

2,586

Non-aeronautical revenue

909

647

979

51%

2,408

3,581

49%

101%

3,556

ACV’s net revenue *

4,646

3,494

4,408

26%

12,312

17,477

42%

99%

17,593

Gross profit

3,331

1,891

2,697

43%

6,558

11,924

82%

95%

12,504

SG&A

-1,009

-940

-1,410

50%

-1,963

-3,697

88%

115%

-3,219

EBIT

2,322

952

1,287

35%

4,594

8,227

79%

89%

9,285

Financial income

995

643

648

1%

3,902

2,501

-36%

105%

2,374

Financial expenses

-20

-30

-44

46%

-855

-410

-52%

618%

-66

Net income from associates

113

45

32

-28%

196

277

41%

120%

231

Net other income/expenses

4

109

18

-84%

6

26

364%

77%

34

PBT

3,414

1,719

1,941

13%

7,843

10,621

35%

90%

11,858

PBT adj. for FX gains/losses

2,920

1,576

1,722

9%

5,192

10,213

97%

89%

11,417

NPAT

2,764

1,254

1,565

25%

7,127

8,574

20%

88%

9,731

NPAT-MI

2,763

1,251

1,561

25%

7,122

8,564

20%

88%

9,702

ACV’s NPAT-MI

2,415

1,031

1,310

27%

6,116

7,321

20%

85%

8,580

State’s NPAT-MI **

348

220

251

14%

1,006

1,243

24%

111%

1,122

D&A

4%

609

590

-3%

2,339

2,364

1%

103%

2,305

EBITDA

11%

1,561

1,877

20%

6,933

10,591

53%

91%

11,590

 

 

 

 

 

 

 

 

 

 

GPM

62.5%

46.4%

53.4%

 

45.4%

59.5%

 

 

62.0%

SG&A margin

18.9%

23.0%

27.9%

 

13.6%

18.5%

 

 

16.0%

EBITDA margin

55.0%

38.3%

37.2%

 

48.0%

52.9%

 

 

57.4%

NPM *

52.0%

29.5%

29.7%

 

49.7%

41.9%

 

 

48.8%

Source: ACV, Vietcap forecast. Note: (*) Excluding contribution from State-invested aviation assets;
(**) NPAT-MI from assets owned by the State (State-invested aviation assets) — the State authorizes ACV to manage these assets (including runways).                      

ACV’s accounts receivable as of YE2023 (VND bn)

Client

Total 

Gross doubtful receivable

Net doubtful receivable

All clients

6,287

6,521

2,876

Vietjet Air

2,982

2,030

1,478

Bamboo Airways

2,133

2,112

205

Vietnam Airlines

1,832

1,232

1,090

Pacific Airlines

874

850

90

Source: ACV, Vietcap

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